One of the highest priorities for business loan brokers is the task of building your lender network. A huge pool of lenders and investors is key to a successful business loan brokerage. You will need to have the ability to offer your clients loan options that fit their individual needs. The larger your lending network, the more choices and options your clients will have for funding. So how does a business loan broker build a huge lender network? Follow the steps below and build trusting relationships with both lenders and investors.
Step One: Vetting Lenders
The first step to building an effective lender network is to determine whether your investors match any of the opportunities that you will be funding. Figure out your niche and locate lenders that fit within it. For example; if you are choosing to specialize in equipment loans, you will need to find investors who are willing to fund the purchase of equipment rather than the purchase of real estate. On the other hand, if you are going to specialize in providing business owners with funding options to improve their inventory, you will need to work with a different type of investor. Start by making a list of the types of funding that you intend to provide and then you can start the process of vetting investors.
Step Two: Start a Dialogue
Once you have determined which investors and lenders will best suit your clients’ needs, you will need to speak to them and discuss the terms of agreement. The best way to do this by starting a dialogue with investors. In person is best, but even a brief telephone conversation is effective. This is your chance to introduce yourself and to sell the idea that working with you is the best option for investors. Here is an example of a script that you can modify for your first interaction with investors, bankers and lenders:
“Hello _____! My name is _____. I am an alternative loan broker in the ____ area and I am looking for investors to help fund some very interesting deals. I work with businesses in need of financing for ___ (choose your niche here) and I believe that you are a perfect fit for a number of my clients.”
At this point, you want to give them a reason to WANT to work with you. Provide a brief overview of how the process works and what they can expect to get out of it. Make them an offer they can’t refuse!
Step Three: Keep Your Promises
After you have created a directory of lenders and investors, you will start matching them with businesses in need. At this point, it is important to remember what promises you have made to both your clients and lenders. Matching them with opportunities that will help both sides grow and succeed should always be top priority. Keep the trust that you have built by remaining transparent and honest in business deals. Don’t forget, people are more likely to work with those that genuinely trust and like. Staying true to your word is top priority in this stage of building your network.
Step Four: Repeat Clients, Repeat Lenders
Businesses in need of funding will return to a lender that they trust and have worked with previously before they go with someone new. When a client is a repeat borrower, make sure that they are matched with the same lender every time. This builds strong relationships and completes your network by connecting deals to one another. Business loan brokers should know that it is important to lenders that they get referrals regularly. Referrals are a huge part of the loan broker business and should be treated as such.
By following these few simple steps when building your lender network, you will ensure that you are building trusting relationships that will result in many funded deals. Lenders and investors need to know that they can trust you. After all, they are putting their hard earned money into something that they believe in, shouldn’t you believe in it too? When it comes to ROI (Return on Investment) you should be at the top of your lender’s mind as the best way to get a great ROI.